All right. Right, we're good. We're We're live. We're live. All right. Thank you so much. My name is Joanna Gajuk. I'm an equity research analyst at Bank of America. Now it's my pleasure to host this session with Service Corporation International. Technically it's not a healthcare company, but it fits very well because of some of the drivers. Service Corporation is the largest cemetery funeral provider in the US. Today with us, we have Eric Tanzberger, the CFO. Eric agreed to go right into Q&A. We have 30 minutes, so I have a lot of questions, but I'll try to hit the most important topics here. I guess the first one is more macro topic, but around the you know the pandemic and the higher death rate that the country experienced and the pull forward effect. You made it sound, lately that you think, 2024 is probably the kind of the bottom. So can you kind of walk us through should we expect growth, you know, in 2025 when it comes to funeral volumes and, and kind of the magnitude of things and how you think about the outlook, you know, from here? Yeah, let me give you the background then and walk you through COVID, really. Well, first of all, thanks, Joanna, for hosting us today. It's been a great conference so far. Ultimately, we're the largest funeral home and cemetery company in North America. Joanna said we have about 1,500 funeral homes and 500 cemeteries. Of those 1,500 funeral homes, as a very general kind of benchmark, we generally perform right now about 350,000 funerals per year across the U.S. and across Canada. When we got into COVID, we ended up, ultimately with an extra incremental 130,000 range of extra funerals that we performed, unfortunately, during the COVID period, which is just a little bit over two years, almost two and a half years where that was performing. So, you know, we had obviously astronomical volume growth, which was unusual and not sustainable and anything, you know, along those lines. So the question is, as we went way up during COVID in terms of the demand, we came back down during COVID and kind of where are we? And the answer is we expect funeral volumes to be somewhat flat to maybe slightly down. And when I say slightly down, I'm talking, you know, low single-digit% type down. But remember, that extra 130,000 funerals that you performed, we pulled forward from future years. The way to think about it, you have to almost take the pandemic and kind of bifurcate it between the early pandemic where, as we all remember, started in the Northeast for the most part, and the individuals that we had to perform services for were elderly individuals in nursing homes and those types of situations. So that was kind of an acute pull forward, you know. That may have been services that we would have performed anywhere from six months to a year to two to three years out such. But after that part of the pandemic, as the pandemic kind of moved as the hotspots, I should say, moved from the east to the west part of the country and the vaccines become prevalent, what really happened for us is the amount of people that we were providing funeral services and goods and services for became a lot younger. You know, we towards the end there were serving people that, unfortunately, were 30-year-old, 40-year-old, 50-year-olds that were not vaccinated, etc., etc., had preexisting conditions in those situations. Those were not pulled forward in the next three years. And so we had never modeled a global pandemic before, frankly. And so we were trying to figure out where we were themselves. But we had times where we had years then post this pandemic that were down, you know, in the teens in terms of percentages, decreases in funeral volumes. That eventually came down to, you know, mid-single-digit% down and low single digits%. And now the guidance for this year is kind of flat to low single digits%. To answer your question and go further prospectively from here, that's kind of the history that I just walked you through. I think next year we're expecting flat to maybe slightly up low single-digit%. So there's still the normal what you would normally see when you take into account some market share growth, being the scale of a company that we have in our markets, M&A activity that we consistently have, and just the aging of North America, frankly. You're generally going to see a normal pace of maybe 1%-2% growth in volume. So, Joanna, we're not there yet, even in 2025. But as you could tell, we're kind of working our way through it, and we're at the tail end of this phenomenon. When we see flat to slightly up, you know, you're going to start to see maybe some growth then in the funeral segment, which is nice. And I think maybe a year after that is when you get to the true, you know, normal numbers of low single-digit percentages. Now, that's all in this existing period prior to the baby boomer generation, independent, mutually exclusively from COVID, you know, affecting the number of funeral services that are we as a company and we as an industry are going to perform. That's probably a demographic play or a demographic tailwind. You know, I would call it at least 4-5 years out. And I don't want to, you know, say that or have anyone take that that's kind of a hockey stick on a graph because it's not. But it's a large generation that will affect this business. And maybe 1%-2% becomes, you know, 2%-3% over a period of time or maybe even a little bit greater than that. And that's going to be a very positive effect to our company because it's a very high fixed cost business. We have 70%-80% incremental margins when we have additional throughput go through. And I probably did everybody a service by referencing our last investor day of May 2022. The last part of the slides, we kind of illustrated the leverage of when this Baby Boomer kind of throughput increases and the type of effect that could have in our company. A normal growth pre-COVID that we expect to be back to next year is 8%-12% earnings per share growth. But when you start getting into that phenomenon of the Baby Boomers affecting, you know, that could be significantly greater than that. I'll just reference those slides. Ultimately, everything we've been doing over the last, you know, 5-10 years in the next 4-5 years is preparing for that event to make sure that, A, we can service it, and B, that it really ends up generating, you know, probably some more significant growth than what we've normally trended to, you know, as a company over the past few years independent of COVID. I'm going to stay on funeral for a second. segment margins, right? So Q1 was a decline over here. There's some comps, so it was about 22% or so for the quarter. But with this outlook for funeral services to, you know, flat to down slightly, how do you think about margins for the year for that segment, gross margins? So the funeral segment, you know, we expect it to be probably flat to down 100 basis points. So call it in the 20%-21% type range. But again, I'm going to level set for some new people into the room. Prior to COVID, this was kind of a 17%-19%, 18%-19% type margin business in our funeral segment independent of cemeteries. The cemetery is in the 30s. That's a different conversation. But, you know, call it 18%-19% times regular type rates in terms of margins. And the fact that we greatly increased during COVID because of the incrementality of the additional funeral services that we performed, we were doing margins in the 25%-30% range in the funeral segment. And the fact that that has come back down now and kind of through this COVID period and still has a two in front of it, you know, we're very excited about. And a lot of that has been the technology and efficiencies that we've tried to generate, as a company to become more efficient and use the learnings that we used during COVID and invest capital into technology, both customer-facing and non-customer-facing technology, which again, when we're still flat volume to have margins in the funeral segment in the low 20s%, you know, we're very excited about it from the trends of previous years. I think once volume, as I've already discussed, you know, a couple minutes ago, starts growing, you know, I do think you may see some margin expansion into the lower 20s% at that point in time, but not materially. It will start moving materially as you've seen in higher throughput environments as we get to the next 4-5 years and you start seeing, you know, the demographics that I just mentioned start pushing higher volumes and high incremental margins through the business. And I guess switching to the other segment, which clearly has been more of a growth driver here in the cemetery side, the pre-sales production, right, this quarter grew nicely 8%, but obviously it was easy comp, right? It was down 16% last year. And then I guess for just thinking about, you know, how you talk about for the full year, expect, you know, call it low single-digits growth in the pre-sales production of the cemetery side. So Q4 has a tough comp, right? But Q3 has easy comp. So kind of what gives you confidence how you can get there? Because, you know, we heard some pushback that, hey, Q1 was up 8%, but, like, the comp was easy. Kind of like, you know, how do you help people understand the dynamics of how you're going to get to the full year, low single-digit growth? So when you're talking about the cemetery segment, there's a lot to talk about. But the main driver to those pretty cemetery sales are funeral services in the other segment. And the fact that, you know, funeral segments funeral segment has gotten better as volume as I've already described to you this afternoon, you know, is a big driver of it. The normal pre-COVID type growth that we were expecting out of our cemetery pre-need cemetery sales were mid-single, even high single digits in a lot of cases. And we're not saying that we can get back there until we get through the funeral segment volume coming back to more normally that 1%-2%. Ultimately, what happens is if we're performing a funeral service and that family's going into a cemetery, they are interring a loved one. But then from a preneed basis, from an adjacency perspective, they're buying one, two, three, four spaces around their loved one that they just interred in the at-need basis. So that's why they're so correlated. But what gives us a lot of confidence is, you know, we just have a lot of momentum in the cemeteries, and you have to get into the history of it and the fact that we have, as a really nice barriers to entry. We have inflationary, if not a little bit more, pricing power in the cemetery segment. We have revolutionized kind of the cemeteries themselves from a very homogeneous offering of just plots of land to a tiered real estate cemetery. For those of y'all that were in the room, some of y'all, I could tell by the faces, came and toured a cemetery with Joanna as she hosted us here in Las Vegas. What you saw are some high-end private family estates, some semi-private family estates, some lakefront property. You know, it sounds like real estate, and it really is. The combination of kind of value progression selling with tiered real estate inventory coupled with some pricing power that we have coupled with some barriers to entry, you know, allows us to generate incremental growth in the cemetery segment more than probably the funeral business itself. But it's going to turn in in low single-digit growth in that pre-need cemetery, though, is not going to get back to that mid-single-digit growth, though, you know, probably till at least next year, when we start seeing funeral volumes that are so highly correlated, you know, switch over and become flat to even grow a little bit. I guess, when talking about the cemetery pre-need sales production, you know, the other dynamic we've been talking about through a couple of last quarters, or maybe even longer than that, is kind of, you know, the high-end consumer, right, or the higher-end properties versus what do you call the core. And I guess what I would notice, you know, the 19% you talk about large sales, you know, growth in Q1 was pretty impressive. So it seems like that consumer are not impacted. So kind of can you talk about your assumptions for the rest of the year when it comes to, like, the core versus the large sales outlook? Yeah. So a little bit of background again. The cemetery sales preneed are about $1.3-$1.4 billion a year, for this year. About 15% of that are kind of large sales, which we define as greater than, you know, $80,000 as a general statement. So, you know, at any point in time, we have a couple hundred million of larger sales. When you look at the significant growth that we saw for this quarter, you have to go back to what you originally said in your statement, and that is a comp issue. Last first quarter of 2023, we had some significant inventory affected by weather in Los Angeles at our largest park. And that generally has a lot of high-end sales as well. So a little bit of this is a comp situation. But I agree with you that throughout the last couple of years, Joanna, the high-end consumer has really hung in there and has been very healthy from a sales perspective. I don't think that's an anomaly for our industry. I think you're right, that's a general statement across a lot of spaces and a lot of sectors that the high-end consumer has really kind of hung in. What we call our core consumer is that 85% that's buying property less than $80,000. And as a general statement, that's entry level, which can be anywhere from $5,000-$15,000 depending on where you are geographically in the country. But a lot of the, you know, the middle tiers as well into the $20,000-$30,000, you know, spend. And, you know, that velocity this quarter was flat compared to the prior quarter. I think that's a good sign. The growth is going to come you know, it's a good sign when you have flat pre-need cemetery velocity or number of contracts, but yet your funeral volume, which is the number one driver, was a couple hundred basis points less than that. Mm-hmm. So I think that's a good sign that, that we're excited about having some momentum in the cemetery segment. I still think, you know, we, we again have guidance out there that we want to reiterate of it being low single digits as we come out of the, the softer funeral environment because of the pull forward effect from COVID that I've already described to you this afternoon. But I think that, we have some really nice good momentum in our cemeteries for all those reasons I just described, the tiered pricing and the value progression selling and, the capital that we're put behind to continue to have that inventory that we're spending about $160 million this year to build more tiered real estate kind of offerings in the cemeteries. And so we're pretty excited about it. Talking about momentum, and also, you know, yesterday when we toured your property, we were also talking about the visitations around Mother's Day. And I was also thinking about, you know, Qingming is a big driver of foot traffic into your cemeteries and I guess more of that West Coast phenomenon. Yeah. So, are you willing to share kind of, you know, what have you seen so far, I guess, around these holidays and that drive visitation to your facilities? Are you seeing, you know, kind of, you know, better traction? I know last year, there was some disruption in some markets. So hopefully this year is kind of more kind of normalized. So how would you describe the traffic and the activity around these? Well, I think the answer is our expectations and our model, as we've said, is that Qingming will be better than last year because last year happened to have a weather event that we described going back to that first quarter of last year, particularly on the West Coast. And I think so far a little too early to tell and talk publicly, but I think we're on plan is the way I would describe it. Qingming, for those of y'all that don't know, is a tomb-sweeping holiday. It's a holiday where Asian communities go into the cemetery and pay respects. And it's a situation which produces leads and produces sales from other parts of the calendar during the year. It's predominantly wherever we're catering to the Asian high celebration consumer in our cemeteries, which, you know, generally, it's across the nation, but you're seeing it more predominantly on the West Coast from Vancouver all the way down to L.A., you know, for the most part. You know, I think we're excited about it. Crosses over first quarter to second quarter into March and into April. So far, I would say that, I'd generally give you a comment that we're on plan. Okay. Good. Good to hear that. On the cemetery segment, margins there, so I can mention the higher margins than funeral segments, you know, historically. And obviously, the last couple of years, these margins were even higher, much higher. And seems like, you know, your commentary has been around the segment margins in cemetery to remain sort of higher than pre-COVID. So can you talk about the confidence there? And, you know, yesterday, you also showcased your Beacon tool that's being utilized by your sales force there. So can you kind of, you know, try to size up maybe some of these benefits and how to think about gross margins in that segment going forward? Yeah. So, so pre-COVID, the cemetery segment was a lot more profitable than the funeral segment because of the throughput. And the throughput is because of the Baby Boomer generation crossing over the average age of when somebody buys pre-need cemetery, which is 62-64 years old. So differential than the funeral segment in terms the Baby Boomer generation has already affected that. Obviously, COVID affected that as well. So we start the cemetery segment, excuse me, pre-COVID in the 28%-30%-ish range of a gross margin. That grew dramatically into the high 30s because of the throughput during COVID. Similar to what I just described to you in funeral segment, we learned during COVID. We became more efficient during COVID. A lot of that is based on technology that I could go deeper into. But ultimately, we went all the way up into the high 30s. We've settled back down into kind of the low 30s. I think that's good guidance for this year. But again, it's better than we were pre-COVID. Some of the technology you mentioned was a software that's homegrown software called Beacon. And what that allows us to do is to utilize a tablet, even in a Zoom environment, even in a virtual environment, not necessarily in front of the consumer as we couldn't do during COVID in certain geographic jurisdictions. But ultimately, it made us more efficient. It's an electronic presentation that lays everything out. The contracts are electronic, done real time there. The payment is done real time. So if you think of a sales counselor's life that's going out to somebody's home with, you know, picture books and manual contracts and no way to really take a credit card and have to take a check and go back and get signatures, etc., etc., and now something that could have been 3-4 hours, if not longer, on a second day is now down to 30-45 minutes, it makes your Salesforce that much more productive. And that's some of the stuff we learned, Jo. One of the statistics I said earlier during a one-on-one meeting is just historically, go back to pre-COVID and go call it 2018. Between prearranged funeral and pre-need cemetery, it was about $1.8 billion that we sold during that year utilizing about 4,300-4,400 sales counselors. Today, in 2024, that 1.8 is $2.7-$2.8 billion with about 3,800 sales counselors. So for us to go up $1 billion with, you know, 500 less sales counselors, the only answer to that is technology. And we showed Joanna and some of the guests we had that toured yesterday at one of our facilities here in Las Vegas. And we showed and walked them through a mock presentation of the Beacon tool, which just plainly makes our Salesforce more efficient. When you take that tool and you combine it with the capital that we have invested over the last 5-7 years into our Salesforce CRM system that makes those leads that much better and combine it with the efficiencies of the tool to make it quicker and make the sale and the entire process quicker, that just led to, you know, a pretty significant productivity play that I don't know how else I could lay out two numbers than what I just did, the $1.8 billion-$2.8 billion, with, you know, 500 less sales counselors. I think that speaks for itself and, and really points to the efficiencies of the technology and the processes that we learned during COVID to benefit our company. Yeah. Because the other question, you know, that raised yesterday when we were, you know, looking at this tool that's utilized by your Salesforce, you know, your competitors, I assume, are far behind on that. I mean, would you say that there are any regional players maybe are anywhere close to where you are in terms of that tool? Well, they're starting to. The problem with our industry is relatively small, $20 billion industry. So there's obviously no software that could be applied to this. It has to be homegrown. And that takes a lot of capital. I would describe it as we are leaps and bounds ahead of anybody. But again, I would also describe it as we're not necessarily competing head to head with some of those other consolidators. We're competing in markets more or less with the 80% of the independents that are out there because, you know, we have 15%-16% market share. The other much smaller consolidators all combined have maybe 3%-4%. So call the consolidation industry 20 and the independents 80. We're really competing just based on sheer averages with that 80% of those independents. No, they don't have that. Yes, we are we feel strongly that through our preneed backlog, our preneed programs that have generated a backlog of today, as we speak, about $15 billion of future revenue is going to pay off over the long term. And we believe we are going into those independents, you know, customers, so to speak, and signing them up into our preneed backlog. And we think that's a future market share play for us. Right. There was another topic I want to introduce here that was discussed on the call that generated, you know, some questions into us about this. You know, you talk about some changes you're making in SCI Direct business, right? Mm-hmm. It sounds like you started this, actually last year in California, right? We did. Because of some of the things. At that time, you, you talk about this being like a $0.05-$0.07 headwind for 2023 guidance. Yes. So how should we think about because you made it sound like there's going to be incrementally more of these markets, I guess, going the same route. So should we think about this as being, you know, incremental headwind into 2024 as you kind of introduce the same changes in additional markets? And is that incorporated in your guidance? It is incorporated in our guidance. So this SCI Direct business is a direct cremation, pre-need driven business that's got $200 million in revenue. So it's relatively small compared to $4-$4.5 billion of revenues of our entire company. We were in a situation where, in my opinion, there are conflicting laws in California. And us and the attorney general took exception to, you know, if we had to fund our trust funds with products that we've already delivered to the consumer. That's the gist of it in a noncomplicated way. From that perspective, we made some operational changes starting early last year to no longer deliver those products to the customer and, in fact, deliver it when the actual need occurs rather than doing a pre-need delivery. For those situations, we do not have that revenue recognition. So if you think of a $3,000 sale, think of we delivered 1,500 of it and trusted 1,500 of it. Now think of deferring 3,000, the full 3,000, and delivering that 3,000, therefore recognizing that revenue at the time of need. We kind of made those changes, throughout 2023 and into the first quarter of this 2024. That was about a $0.06-$0.07 headwind in 2023 and another $0.06-$0.07 headwind really in this quarter alone. And that's relatively behind us. If we choose to do different things across the rest of the SCI Direct network that is built in, I'd also tell you that there's a tailwind coming as well, which is we're going to take that entire contract and sell it like we do our funeral home pre-need contracts using an insurance contract as the funding mechanism. And that's going to produce general agency revenue. And that's going to kind of offset a lot of that effect. So I would think of this as generally behind us. I would think of if that particular business being somewhat flatish from an operating profit perspective. But I'd also say that this is going to be exciting a couple of years from now because what's going to start coming out of that backlog is $3,000 instead of $1,500 over the life of that subsidiary that we've owned since really 2011 or so. And I think that's going to end up being a nice growth factor differentially a few years from now that we're kind of excited about. But any type of effect of this transition, as we just announced the settlement a couple of weeks ago with the California AG, is built into it, was known built into that guidance. And a lot of it, frankly, is any type of negative effect, Joanna, is pretty much behind us. Good to hear that. So I guess it sounds like that maybe implies even the, the core is actually doing better when you when you have this. But, maybe you were including it already. So maybe that doesn't really make a difference there. But, we have a couple of minutes left. So maybe another topic you mentioned, you know, market share gains and who you compete with. But also the other part of it is, your acquisition, strategy is part of the of your sort of growth algorithm. So can you talk about that? Because, you know, the, the recent comments imply that, you know, there's more, I guess, assets for sale or, you know, you're, you're seeing a bigger pipeline. So should we expect a kind of acceleration of activity into, you know, later this year? And kind of what assets you're looking at? Is there some particular markets, you're kind of targeting, to go after next? Yeah. Well, what we really like are the major markets. And we like large independents that have cemeteries and funeral homes on top of cemeteries, combination facilities, which are, you know, one-stop shopping for the consumer and a tremendous value for the consumer and are the most efficient in terms of scale from our perspective as well. Ultimately, we're going to spend $75-$125 million in a year on M&A. I made the comment a couple of weeks ago publicly on the call that I think we'll be at the high end of that. I've been making a comment over a couple quarters or really a couple years that the pipeline is really healthy. And we're excited about it. It's taken some time for those independents not just to raise their hand and say, "I like liquidity event," but to also get all of their side of the fence, you know, the entire siblings and family on the same page in a lot of these instances. Now we're starting to see that happening. And so, you know, we're excited to be at the high end of that range. And we hope that builds further momentum. When you think of our growth trajectory, of 8%-12% per share that we hope to be back to in 2025, you know, about half of that's organic and a half of and, and the other half is a combination of M&A and share repurchases. So M&A is very important. But if M&A starts picking up, you know, we're, we're really excited about that. So far, you know, that's what we expect for 2024. Great. I think, this was perfect because we just ran out of time. So thank you, Eric, so much. Thank you for joining us. Thank you.